India Pursues Free Trade Agreement with the UK Amid Global Economic Challenges

India is eager to establish a free trade agreement with the UK in a timely manner as both countries ramp up discussions amidst mounting global economic uncertainty, largely attributed to the imposition of tariffs by former President Donald Trump. During her visit to London, Finance Minister Nirmala Sitharaman expressed that India is actively seeking bilateral trade agreements in response to the diversifying and often disjointed global economic landscape.

In her remarks prior to meetings with UK Chancellor Rachel Reeves, Sitharaman highlighted that the changing geopolitical situation emphasizes the importance of countries focusing on direct trade relationships. While she stated that the US tariffs are not the sole reason for India's urgency in trade negotiations with the UK, she acknowledged their role in the broader economic challenges prompting the country to explore new trade partnerships.

India and the UK have been engaged in negotiations for a free trade agreement since January 2022, with discussions recently reinitiated under the new Labour government. This week's dialogue, which also involves Trade Secretary Jonathan Reynolds, is part of the 13th UK-India Economic and Financial Dialogue and aims to cover a range of topics including a bilateral investment treaty and the mutual recognition of professional qualifications.

During her discussions, Sitharaman will meet with London’s Lord Mayor and local industry leaders. The ministers are also expected to have a working dinner, with the possibility of Prime Minister Keir Starmer's attendance. She articulated the need for nations to move away from traditional alliances and embrace bilateral agreements as the world shifts towards a multipolar model.

Sitharaman noted that India’s drive to enter into trade agreements is long-term and a response to the evolving economic landscape. She emphasized India's robust domestic demand as a pillar of its economic resilience, acknowledging its standing as one of the fastest growing economies influenced by the global demand for high-quality goods.

The UK is advocating for reduced tariffs on products like whisky and automobiles, alongside greater access for its services sector in India. Conversely, India seeks streamlined visa processes for its professionals who stay temporarily in the UK for business, though there are concerns regarding the National Insurance contributions required from its workforce on business visas.

Additional discussions are expected to cover educational collaboration as Sitharaman cautioned that the UK is losing its appeal to Indian students compared to the US, calling for renewed initiatives to reverse this trend. Despite debates within the UK government about tightening international student visa rules, several British universities are expanding their operations in India, with new programs being implemented in financial hubs like Gift City. Sitharaman's visit aims to attract further investment in this promising area.